The IRS Attack on Small Business

We often hear the commonplace that the two certainties in life are death and taxes. (Though according to recent reports, we should probably amend that to death by taxes).

Not only does the IRS want your hard earned money, but it now appears the federal tax organization is intent on forcing regulations on to small, independent tax preparers in an apparent power grab that will benefit larger tax chains and limit your options as a consumer.

The new regulations, which were implemented last year, require that independent tax preparers register with the IRS, pay additional fees, and take a string of unending continuing education courses — adding up to additional costs well over $354,000,000.

The rules would fall heavily on small business owners like Sabina Loving, who opened her own tax service in Chicago’s South Side to provide financial advice to low income minority customers. The new rules would drive up her costs to the point where it would no longer be feasible to continue her business. It would cut down on the number of independent tax preparers, driving down competition and leaving many Americans with limited options when it comes to getting their taxes done.

Now the IRS is saying these rules are necessary to root out unscrupulous tax return preparers and to cut down on erroneous reports, but the solution the IRS proposes does not solve the problem: it would only drive bad tax preparers underground with no way to regulate them at all. And worse, it would put honest accountants out of business.

And if that’s not enough, let’s look at how the IRS is applying these rules. Large tax chains like H&R Block and Jackson Hewitt don’t need to meet these requirements — yet small tax prep companies do. And if you are registered with the CPA you also don’t have to worry about adhering to the new regulations.

Simply put, these new rules will not make independent tax preparers better at their jobs, they are in place to force them out of business for the benefit of larger tax prep chains.

Fortunately, this insanity is not being taken sitting down. Sabina Loving and several other tax payers have joined forces with the Institute for Justice and have filed suit against the IRS.

I recently ventured to Chicago to speak with Ms. Loving and the good folks over at the Institute for Justice’s Clinic on Entrepreneurship about the burdens the federal government is putting on independent tax preparers and what Loving is doing to fight back.

Given the documented inability of the IRS to correctly answer taxpayers’ questions, maybe they should require their own people to take those continuing education courses first, before demanding it of others.

As far as I’m concerned, the real war of the future is not against Congress or a feckless president, but against this particular bureaucracy, the IRS, which has grown into a Balrog of monstrosity with more power over the citizens than it was ever intended to have. Money is the juice of government, and who better to squeeze it out of the electorate than Obama’s vaunted “unelected officials” of the IRS?

I have, unfortunately, spent a great deal of time reading these new rules. While I think your point still holds, I don’t believe it’s accurate to say that the new rules don’t apply to H&R Block and Jackson Hewitt. The registration rules work differently for companies who have certain types of certified or registered personnel who can supervise the rest of the staff. Consequently, larger firms are likely to be able to comply with the rules with a lower per preparer cost than a small firm. The rules are onerous in one way or another, but larger firms can more easily absorb the costs.

Additionally, some of the works screw ups I’ve ever seen were from highly trained and certified attorneys and CPAs so I’m not really sure that any of this additional testing and coursework is going to be worth a whole lot.

Mrs. Loving is just trying to make a living by helping the people in her community comply with a government bureaucracy who itself should probably be investigated for incompetence. And what about all of those politicians who were caught trying to get away with out paying their taxes. Maybe they should take continuing education on how to be an American. I’d laugh except it’s not funny. What happened to LIBERTY & JUSTICE FOR ALL.

This is simply a constinuation of the action plan started long ago. It’s called Walmartization by the left and it is their buddies, the government, that is doing it. It reduces the number of business entities and increases the government’s ability to control them. They are just simply making it easier for themselves. A few large businesses are far easier to control than a multitude of small ones.

I prepare taxes for HR Block. Yes we do 30 hours of classes every year and yes we do have to be registered with IRS with a number,and yes we do have to pass the exam. IRS has so many rules, regs and forms not anyone I know can remember everything. We do research as needed sometimes as we are doing returns.